The big business of farming

Not only have farms themselves grown, but the industry that feeds them is bigger, too

By Steve Tarter

Everything’s bigger on the American farm scene these days. Everything, that is, except the number of farmers.

In 1870, half of the U.S. population was employed in agriculture, compared with less than 1 percent today.

But today’s farmers are working on larger farms than their predecessors. It’s not uncommon for corn and soybean producers to have fields spread across several counties.

Factory farms are displacing the local family farm, altering the life of many rural communities, charged the Sierra Club, citing the fact that the number of U.S. hog farms has dropped from 600,000 to just over 150,000 in the past 15 years, while the nation’s hog inventory has remained the same.

Along with the farms, agribusiness firms also have grown, taking a dominant position in a number of key areas.

Four firms, Tyson, Cargill, Swift and Co. and the National Beef Packing Co., now control more than 80 percent of the U.S. beef packing industry.

“Today the packer monopoly is far more powerful than it was back in (Teddy) Roosevelt’s time. And now, as then, the food security of America is in danger as producers and consumers are both being cheated,” said Mike Callicrate, owner of Ranch Foods Direct in Colorado Springs, Colo.

Consolidation also has sprouted in the seed industry.

“Twenty years ago, some 600 independent seed companies served U.S. farmers. Today, there are only 150 in the country,” said Kristina Hubbard, program coordinator for the Seed Concentration Project for the Organization for Competitive Markets, a nonprofit group that encourages trade based in Lincoln, Neb.

Nothing is more fundamental to American agriculture than seeds, and the dominant player in today’s seed market is St. Louis-based Monsanto Co., said Hubbard from her office in Missoula, Mont.

Monsanto has acquired dozens of independent seed companies in the past decade, said Hubbard, adding that the company gains control of the market through seed licensing. Monsanto research has led to varieties of biotech seed with built-in pesticide or other attributes called traits.

Small independent companies offer their own seed with Monsanto’s technology, paying a licensing fee for that privilege, she said. The practice allows Monsanto to further dominate the seed market — even seed sold by other companies, she said. It’s not just corn and soybeans but cotton and vegetable seed that Monsanto controls, Hubbard said.

“Monsanto seed has proved popular with farmers. Seventy percent of the corn and almost 99 percent of the soybean crop planted in the United States last year contained seed traits developed by Monsanto,” she said.

But Monsanto’s popular and effective seed doesn’t come cheap. The company bumped up corn seed prices 15 percent this year over 2007, but prices next year on different varieties of corn seed will increase from 35 percent to 40 percent, said Monsanto executive John Jansen.

“Nobody likes a price increase, but seed still represents only 16 to 18 percent of a farmer’s input costs. We price products according to performance,” he said.

Monsanto, whose sales topped $1 billion earlier this year, defends the cost increases, pointing to bigger yields that their biotech seeds provide for farmers at a time when commodity prices are up. “We spend $2 million a day on research and development. We spend more than any other competitor,” said Monsanto spokesman Darren Wallis.

By the numbers

19 percent In 1982, farms of 1,000 or more acres used 19 percent of U.S. farmland.

$500K Farms with sales of at least $500,000 now account for nearly half of all farm production.The seed industry and beef packing industry are examples of how just a few companies control supplies for farmers.